One Thing & Another

New York City

Notes From My Journal: Fathers and Sons

I took an Uber from the Beekman Hotel to the Met. It was a half-hour drive. Andre, the driver, was 51 years old. He was born in Haiti (he told me numerous times), came to the USA at 5 with his family (he was the oldest boy of many), began working when he was 8 at a convenience store, and asked his father for a dime when he was 9. His father refused and that infuriated him. He cried and cried (he said). And then he vowed that he would never ask his father for another penny.

“He died in 1998, 20 years ago,” Andre said. “And I kept my vow.”

Several years after his father’s death, a Florida attorney contacted Andre to tell him that his dad had long ago invested in a piece of property in Fort Meyers. (“It was nothing back then.”) The property, which had a net value of about a hundred grand after paying off the mortgage and back taxes, was willed to Andre.

“I told him I didn’t want it. Had no use for it. I told him to give it to my siblings.”

I wondered if Andre had children. I asked him. He had three. The oldest was in Harvard. The second was a nurse. And the third was a straight-A student who wanted to be a surgeon.

“I always told my children: a B+ is not enough. You can do better than that.”

Andre used to live in the city, he told me, but got tired of the noise and the dirt.

“I don’t like the subways here. They are full of germs. People think I’m crazy because I used to hold onto the bars with a handkerchief. They don’t know what goes on at night, when the homeless people ride them.”

He also told me that Haiti had hidden oil and gold reserves that were greater than could be found in the USA.

“Haiti should be a rich nation, “ he said. “And there are some very fancy houses there. But the US government don’t want Haiti to be rich. It keeps it down.”

I chose to believe him. On all counts.

Today’s Word: valetudinarian (noun)

A valetudinarian (val-ih-tood-n-AIR-ee-un) is a chronic invalid whose favorite subject is the state of his health. As used by Ralph Waldo Emerson: “[Beware] of unmuzzling the valetudinarian.”

Scary Fact

After age 30, the brain shrinks one-quarter of a percent every year.

From My “Work-in-Progress” Basket

Principles of Wealth: #16 of 60*

Having expensive things is often equated with wealth. But it is not, by any means, a measure of wealth.

The Year: 1984

“There’s a house that I want to buy. But I don’t know… Do you really think I can afford it?” I ask Eddie, my lawyer.

“Yes,” he says, looking at me queerly.

“But it’s a hundred seventy grand,” I say. “That’s a lot of money.”

“Mark, I just went over your financial statement,” Eddie replies. You make six figures and have a net worth of more than a million bucks.”

“So?”

“So you are richer than most of the doctors and lawyers you know who are living in million-dollar homes.”

“How could that be?”
“Because they live in million-dollar homes.”

The Year: 2000

My friend Bernard has done very well in the furniture business: manufacturing it in China and selling it all over the USA. In most respects, he is a modest guy. He’s humble. He never boasts. He lives in a nice but not ostentatious house. But he does wear expensive watches and he drives luxury cars.

I ask him about this anomaly. As it turns out, those watches and cars are not, like most luxury products, diminishing assets. They are inventory in a side business he’s been in most of his life.

Bernard makes a six-figure second income buying and selling nearly new cars and watches. He buys them not from retailers or brokers but from people, people that want to look rich.

Example: A 36-year-old hedge fund manager makes a $400,000 bonus in his first year. He spends $320,000 of that on a brand-new Rolls Royce. Six months later, the stock market takes a dive. And a month after that, his income tax comes due. Not having set aside cash for Uncle Sam, he must sell his almost-brand-new car. He puts it on the market for $290,000. A week goes by without a single offer. He lowers the price to $265,000. No response. Desperate, he drops it to $190,000. But there are still no buyers. Bernard buys it for $160,000, drives it around for six months, and then sells it to an actual rich guy for $190,000.

Bernard and the hedge fund guy each enjoyed that Rolls for about six months. The difference between them? Bernard is 30 grand richer than he was when he bought it… and the other guy is broke.

The Year: 2018

Frank lives in a 7,000-square-foot house in a luxury neighborhood in Boca Raton. He drives a Mercedes. His wife drives a Porsche. They have a pied-a-terre in New York City, and wear expensive clothes. Most of their friends believe them to be rich. What their friends don’t know is that Frank’s business imploded 10 years ago. Five years later, he filed for bankruptcy. Since then, Frank and his wife have been living hand-to-mouth on borrowed money (some of it mine), spending all of their reduced income to keep up appearances.

Here’s the point of all three of these little stories: There is always a cost to having things, whether you own them, lease them, rent them, or borrow them.

Being wealthy means being able to easily afford the cost of the things you have – regardless of whether you own them.

Having things you can’t afford is not what wealth builders do.

* In this series of essays, I’ll be rethinking and expanding upon many of the observations I’ve made over the years about wealth: What it is, what it’s not, how it can be acquired, and how it is usually lost.